What is wholesaling?

Question

Everyone keeps telling me that I need to start with wholesaling before I get myself in too deep since I am still a newbie.

Without making fun of me, what is wholesaling? Or can someone help me find a link with this topic already open because I cannot find it though it must exist, lol.

Steve Babiak · Answer

Please don't take offense, but the experienced posters on this site prefer to answer specific questions rather than the sort of generic questions you asked.  Rather than ask that type of generic question, dig in and read the posts from the forum that was already identified above - and then ask your specific questions regarding a topic you have trouble with.  There are no "dumb" questions, but we first expect that you perform a bit of your own research and learn as you read, since most questions posted on this site seem to be repetitive and hence already have been answered more than once.

Mark N.A · Answer

Mike:

While you're exploring the definition of 'wholesaling', see if anyone in your area is ACTUALLY DOING IT on a regular basis.

Around here THEY AIN'T.

Tom Bukacek · Answer

Mike- here's a good article on wholesaling for beginners:  http://www.biggerpockets.com/articles/863-the-basics-of-wholesaling-for-beginners

Mariah I. · Answer

Yes you could as long as you have some escape clauses.

Jason Reed · Answer

As a follow up question, when the term under contract is used, are we basically saying you can enter into a written contract with an expiration day.  in other words, could my contract have stipulations such as subject to approval of business partener, or null and void after XXXX date?  In this case, I would basically be holding the house and trying to get deal with an investor?  If I can not close a deal with an investor, I do not want to personally move to closing on the property so I could in theory exit the contract.

Mariah I. · Answer

For a new investor I would like to add the following factors:

The Benefits of Wholesaling

1 You don't need any money to buy the property because, in effect, you're not actually buying it. You're buying the contract and then re-selling it. Many times, your name won't even be on the property title unless you choose to double-close it

2 You don't need a good credit rating because, again, you're not buying the property. In the "regular" real estate market, you won't get anywhere without good-to-excellent credit because lenders don't like risk. Wholesaling has no such barrier. It doesn't matter what your credit rating is; you can dive in and start making money using only your brain and hard work.

3
There's minimal risk because you're selling paper or a contract, not the property itself.

4
There are no holding costs. You don't have to pay mortgages or do any maintenance. You can buy "as is" and sell "as is."
5
The condition of the house doesn't matter. Wholesaling is all about price.
You have the ability to make money quickly (closing on a property between 14 to 30 days).

6
There is an abundant supply of wholesale properties and not as many investors going after them (compared to other real estate strategies).

Brian Haskins · Answer

Wholesaling is basically when you go out and find a house that someone wants to sell way under value, you then put it under contract and then go out and find another buyer that wants to buy it from you for more than what you have it under contract for. You then use an assignment contract to let the new buyer take over your contract and close in your place. Then you just make the spread of what the new buyer bought it for and what you had it under contract for.

Brian Haskins

Mike Rubin · Answer

And I apologize if my questions seem very basic / dumb. I am very new to this industry but it fascinates me! I just got done reading "Rich Dad, Poor Dad" and "Success Stories" in that RDPD series. I have also been talking to a lawyer who I am friends with and I have been learning a lot from him as well.

Mike Rubin · Answer

Thank you Tom!

Mike Rubin · Answer

I heard about people who opt out of their contracts because they had to close the deal. How long do these contracts exist for? I.E, how much time would I have to find a buyer for the property before I have to exit the contract / close the property (which most likely I won't be able to do since I do not have enough money lol)?

What is wholesaling?

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